Chinese defence stocks slump as India-Pakistan ceasefire halts demand surge from recent conflict
Beijing: Chinese defence stocks came under significant selling pressure on Tuesday following the announcement of a ceasefire between India and Pakistan.
The two nations agreed on May 10 to an immediate halt to all military actions across land, air, and sea after four days of high-intensity cross-border exchanges involving drones and missiles.
The flare-up began when India launched Operation Sindoor, targeting terror camps in Pakistan and Pakistan-occupied Kashmir.
In response, Islamabad fired a series of drone strikes into Indian territory.
India's advanced air defence systems intercepted most of the incoming strikes, which heavily relied on Chinese-supplied weaponry, including drones and missiles.
With hostilities now paused, shares of major Chinese defence firms fell sharply. On May 13, the Hang Seng China A Aerospace & Defence Index was down 3 percent, Moneycontrol reported.
Among the biggest losers were AVIC Chengdu, which dropped 8.6 percent, and Zhuzhou Hongda, down 6.3 percent.
AVIC Chengdu Aircraft, the maker of J-10C fighter jets, came under particular scrutiny after Pakistan’s Foreign Minister Ishaq Dar told Parliament that these Chinese-made jets had been used in air engagements with Indian aircraft.
Zhuzhou Hongda Electronics Corp Ltd, which manufactures the PL-15 missiles deployed by the Pakistan army during the conflict, also suffered losses.
China remains Pakistan’s largest arms supplier. Between 2020 and 2024, it accounted for 81 percent of Pakistan’s total arms imports, according to SIPRI data analysed by Moneycontrol.
The Netherlands followed with 5.5 percent, while Turkey — whose drones were also used extensively by Pakistan — contributed 3.8 percent of its defence imports.
AVIC Aerospace, another key subsidiary of the Aviation Industry Corporation of China that produces military aircraft and helicopters, also saw its shares decline by over 2 percent on the Hong Kong exchange.
AVIC, a state-owned defence giant, encompasses many of China’s major design and manufacturing arms for military aircraft and airborne weaponry, making it a central player in China’s defence exports — and particularly exposed to regional conflicts involving its clients.
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